What is the carbon tax?

The carbon tax is a charge applied to carbon-based fuels such as coal, peat, oil and natural gas. Introduced in 2013, the tax is intended to reduce carbon dioxide emissions and is part of Ireland’s strategy to support a greener and cleaner environment.

What does the carbon tax cost me on my gas bill?

Natural gas suppliers in Ireland, such as Bord Gáis Energy, Electric Ireland and Energia, are all obliged to add a carbon tax charge to all customers' bills, which works out at 0.42 cent (including VAT) for every kWh of gas used.

Considering that the average Irish household uses 11,000 kWh of gas every year, the carbon tax adds around €46.20 to your annual natural gas bill, which works out at around €7.70 on every bi-monthly bill.

Carbon tax is not applied to electricity bills (although here there is the PSO levy).

Where else am I paying carbon tax?

If you’re a big fan of a blazing fire fuelled by coal and briquettes, you will probably have noticed a couple of hikes on the price of these fuels over the past couple of years. You guessed it – carbon tax is fuelling those increases too.

May 2013 saw the price of a 40kg bag of coal rise by €1.20. A year later, another €1.20 was added, meaning that an €18 bag of coal is now made up of €2.40 in carbon tax.

That all works out at a rate of €52.67 for every tonne of coal burned (after May 2014), due to the fact that one tonne of coal actually produces three tonnes of CO2.

Briquettes don’t have as much carbon as coal does and are therefore taxed at the lower rate of €36.67 per tonne. Milled peat comes in at €17.99 per tonne while all other types of peat are taxed at €27.25 per tonne.

How much more am I spending on coal and briquettes?

Let’s look at an example.

Carbon tax brought the price of a bale of briquettes up from about €4.50 to roughly €5. Let’s say you get through two bales on a cold night and let’s pretend there are only 90 cold nights a year in Ireland (optimistic, I know!). With this usage, you’re spending €90 more on briquettes than you were in 2012, due to the carbon tax.

And that’ll burn a hole in anyone’s budget.

Are there any exemptions to the carbon tax?

Yes, a few.

Firstly, gas that’s used to produce electricity is free from the carbon tax. Gas used in chemical reduction and metallurgical or electrolytic processes is also off the hook.

There are some discounted rates too; for people who have a greenhouse gas emissions permit, as well as those involved in cogeneration schemes.

How can I save?

If you’ve never heard of electrolytic processes and aren’t part of a cogeneration scheme, you’re subject to the full brunt of the carbon tax. But there are still some ways to save.

Using wood to fuel your fire and maybe investing in some woolly jumpers to keep you warm on chilly evenings will help reduce your carbon tax costs. However, the best way to save is by reducing your gas consumption and checking to see if you’re on the best rate out there.

bonkers.ie is a trading style of Bonkers Money Ltd. registered office Nutley Building, Nutley Lane, Dublin 4. Registered in Ireland, company number 477742.
Our logo and the word bonkers® are registered trademarks of Bonkers Money Limited and may not be used or reproduced without prior written permission.